This article is Depreciated. (Already fixed with DSM 3.1-1613). Older DSM version may need to manually fix this using procedures below.
The default setup only allow three terminal logins which is easy to avoid admin further login due to all those zombie ptys.
Here is the procedures to increase the number of ptys (information from synology official forum)
1. mknod /dev/ptmx c 5 2 2. chmod 666 /dev/ptmx 3. mkdir /dev/pts 4. echo "none /dev/pts devpts gid=5,mode=620 0 0" >> /etc/fstab 5. mount /dev/pts
To have this always active after reboot, add line 4 and 5 to the /etc/rc.local